According to the producer price index database maintained by the Bureau of Labor Statistics, the average cost of computer equipment fell 3.8 percent between January and December 2016. Lets see whether these changes are reflected in the income statement of Computer Tycoon Inc. for the year ended December 31, 2016.

	2016				2015
Sales Revenue		$	105,000			$	127,500
Cost of Goods Sold			62,500				73,500
Gross Profit			42,500				54,000
Selling, General, and Administrative Expenses			36,500				38,000
Interest Expense			550				500
Income before Income Tax Expense			5,450				15,500
Income Tax Expense			1,500				5,500
Net Income		$	3,950			$	10,000

Required:

1. Compute the gross profit percentage for each year. Assuming that the change from 2015 to 2016 is the beginning of a sustained trend, is Computer Tycoon likely to earn more or less gross profit from each dollar of sales in 2017?
2. Compute the net profit margin for each year. Given your calculations here and in requirement 1, explain whether Computer Tycoon did a better or worse job of controlling operating expenses in 2016 relative to 2015.
3. Computer Tycoon reported average net fixed assets of $54,700 in 2016 and $45,600 in 2015. Compute the fixed asset turnover ratios for both years. Did the company better utilize its investment in fixed assets to generate revenues in 2016 or 2015?
4. Computer Tycoon reported average stockholders equity of $54,500 in 2016 and $41,300 in 2015. The company has not issued preferred stock. Compute the return on equity ratios for both years. Did the company generate greater returns for stockholders in 2016 than in 2015?

Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 1-a. Compute the gross profit percentage for each year. (Round your answers to 1 decimal place.) 1-b. Assuming that the change from 2015 to 2016 is the beginning of a sustained trend, is Computer Tycoon likely to earn more or less gross profit from each dollar of sales in 2017? 1-a. Gross Profit Percentage 40.00% 2015 2016 40.41 % 1-b. Likely to earn in 2017? More Gross Profit Less Gross Profit Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 2-a. Compute the net profit margin for each year. (Round your answers to 1 decimal place.) 2-b. Did Computer Tycoon do a better or worse job of controlling operating expenses in 2016 relative to 2015? |2-a. 2015 Net Profit Margin % % 2016 2-5. Controlling operating expenses in 2016 vs 2015? Better Job Worse Job Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 3-a. Computer Tycoon reported average net fixed assets of $54,700 in 2016 and $45,600 in 2015. Compute the fixed asset turnover ratios for both years. (Round your answers to 2 decimal place.) 3-b. Did the company better utilize its investment in fixed assets to generate revenues in 2016 or 2015? |3-a. Fixed Asset Turnover 2015 2016 3-b. Investment better utilized? O 2015 O 2016 Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 4-a. Computer Tycoon reported average stockholders' equity of $54,500 in 2016 and $41,300 in 2015. The company has not issued preferred stock. Compute the return on equity ratios for both years. (Round your answers to 1 decimal place.) 4-b. Did the company generate greater returns for stockholders in 2016 than in 2015? | 4-a. Return on Equity (ROE) 2015 2016 4-b. Greater returns generated in 2016? Yes O No